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September 30, 2019

A pyrrhic victory for Kurz

Sebastian Kurz won a historic victory in Austria's national elections yesterday. The ÖVP won 37% nationwide, leading in all counties except Vienna. The party increased its share by 5pp, also thanks to voters from far-right FPÖ. The real challenge is now to build a stable coalition government. None of the other parties is a natural partner, and coalition building will be a protracted affair.

Theoretically Kurz has three options for a two-party government:

Most talked about is a coalition with the Greens, the biggest winner in these elections emerging with 14% up from 4% last time. Both parties performed much better than expected in the polls. But the Greens are not keen to govern with Kurz, and neither are ÖVP voters keen on a coalition with the Greens. 

The second possibility is to re-run the coalition with the FPÖ. Kurz kept this option open during the campaign. This strategy served him well, as FPÖ voters who were alienated by the corruption affair that triggered the election switched camps towards the ÖVP or abstained. But the FPÖ said last night that it wants to go into opposition. A coalition with the FPÖ would be risky also for Kurz, who cannot afford a second break-up of a coalition government.

The third is a coalition with the social democrats, the SPÖ. But the two parties are far apart politically. Also the SPÖ will first have to digest their loss of all but one county. Not a natural solution from either side. 

A coalition with the liberals, Neos, may be ideal for 40% of the ÖVP voters. Neos did well, gaining votes in these elections too. But their 7.8% share will still not be enough to make them a single coalition partner. The so-called Dirndl coalition, together with the Greens, is another possibility discussed in the media. This three-party coalition would not be necessary in terms of numbers, but perhaps it would be politically. Could Neos be the bridge between ÖVP and the Greens? Perhaps. But negotiations are sure to be complicated.

Another option is a minority government, but Kurz would then have to do some parliamentary power-brokering. Kurz might be an excellent campaigner, but does he have what it takes to run such an unreliable majority? António Costa pulled this off in Portugal by striking a deal with the Left bloc and the communists. But it takes constant reassurances of trust and a lot of teamwork. Also Portugal benefited from a positive economic environment. For Austria the outlook is much gloomier. As the German industry takes a dive, Austria will be hit too. Against this background Kurz will have to weigh his chances, while the potential partners will have to evaluate their readiness to govern with him. Kurz has an incentive to get a government up and running, as an election re-run would be risky too. The other parties know this and will extract as much as possible out of the coming negotiations. Commentators expect long negotiations, with no government in place until the end of the year.

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September 30, 2019

Will there really be UK elections?

There is a broad consensus that there will have to be UK elections in November or December. We are wondering whether this is indeed so. 

The argument against elections in October was that the House of Commons would need to get a Brexit extension passed first. Let us suppose the European Council extends by three months until end-January, then what?

The same arguments will be made again inside the Labour Party. Tony Blair and Tom Watson will say that there is no way that Labour could win an election, and thus Labour should support a second referendum instead. No deal will need to be taken off the table once more.

If that view were shared by a sufficiently large minority of Labour MPs, a government of national unity, once installed, might prove sticky. It takes two thirds of MPs to bring about an early election under the voluntary procedure in the fixed term parliament act. There may not be such a majority in favour. Many MPs, including those ejected from the Tory Party, are likely to lose their seats. A confidence vote would be an alternative procedure, one that would only require a simple majority. But it would require at least one of the coalition partners - the SNP or the LibDems - to wield the dagger. 

A government of national unity could therefore prove persistent, especially if the Labour Party continued to do badly in the polls. Government popularity and persistence might be inversely related.

We would like to hear from readers whether we may have overlooked an important issue beyond those we know: that the European Council might not extend without an election, or that the SNP or LibDems, or Corbyn, would pull the plug if the new PM got too attached to his or her job.

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